Sunday, January 08, 2012

Fortuna was the Roman goddess of chance and thus entreaties to her were an attempt to insure good luck in any venture. Ancient Romans believed far more than we to do today that chance events played a primary role in their lives.

The Roman historian and statesman Sallust suggested that virtue invited good fortune. But the Biblical tradition offers the Book of Job as a corrective to Sallust's view, and the Gospel according to Matthew puts a New Testament spin on the vicissitudes of life saying: "for [God] makes his sun rise on the evil and on the good, and sends rain on the just and the unjust."

The Protestant and, in particular, the Calvinist tradition believed wealth was a sign of election, that is, salvation which could only come from God and not through the will of the believer. Nowadays, this religious element has been largely stripped from the explanation for why wealth is distributed as it is. Rather, in place of "election" we have "talent and hard work." No doubt in many cases talent and hard work actually figure into the outsized success of certain individuals. I am confident that my dentist did not succeed in learning how to fill cavities and prepare crowns by mere chance. And, I am more than satisfied that violinists who appear at Carnegie Hall have trained at length to warrant such an appearance.

By contrast, those who amass great fortunes through speculation may merely be lucky. Unlucky speculators are usually sent packing to Peoria and so disappear from the finance pages, something statisticians call "survivorship bias." We don't see the unsuccessful speculators and so wrongly assess the skills of speculators in general by putting too much weight on those who've survived to be counted and therefore read about.

Fortunes are also made by being in the right place at the right time. That can be true of corporate CEOs and individual entrepreneurs. It would be wrong to attribute no skill to them. But it would be equally wrong to rule out luck as a key driver of their success, that is, for the ones who are judged successful. (Survivorship bias applies here, too.)

My sister has spent considerable time in the Far East and reports to me that Asians with which she has been in contact are much more aware of the role of chance in their lives. In part, it may be because of the way they view causality. In Carl Jung's forward to the classic Chinese text, the I Ching or Book of Changes, the renown Swiss psychologist provides a compact explanation of the Chinese predilection for chance over causality, or what Jung himself dubbed "synchronicity." From the lowliest worker all the way to the most celebrated tycoon, Asians regularly perform rituals that are supposed somehow to invite good luck. By contrast, tycoons in the West and particularly in the United States tend to attribute their success to their skills and perseverance. Any reversals, however, are often attributed to bad luck.

We who are mere onlookers to the lives of the one percent or even more particularly the one-tenth of one percent, need no special instruction on the luck of those who, so to speak, "have chosen their parents well." Yet, the scions of inherited wealth often feel the same sense of entitlement as those who actually acquire their wealth through effort and ingenuity.

One's place in the world as a person of wealth looks different, however, if the disproportionate accumulation of money is seen as largely the result of chance. Of course, I agree that hard work ought to be rewarded. But good luck in timing, chance connections, and accidents of birth and thus of access to education often multiply the wages of hard work manyfold. The difference in the talent of the world's finest violinist and it's 50th ranked violinist can't be as great as the difference in their compensation would suggest. The income differential between the top 100 money managers and manager number 1,000 may be entirely due to chance: lucky guesses, connections to wealthy investors, unexpected government interventions in markets and so on.

If the idea of Fortuna could be restored to the lexicon of the rich, we might cease to hear from such charlatans as hedge fund manager John Paulson what an obvious benefit their exertions are to society, let alone their investment clients. (Paulson, a longtime darling of the hedge fund community, saw his lead fund decline 52 percent last year.) At the very least, a better understanding of the role of chance in life would cause people to ignore or even heap scorn upon such pomposity whenever it is reported by the media.

If the accumulation of great wealth is not merely the result of talent and hard work, then it must also be the result of circumstances made possible by society at large. That implies a substantial obligation to others who make such success possible and keep its fruits secure. No billionaire could exist alone on a desert island. No fortune could remain secure without the assent of the population through a nation's property laws and court system. To acknowledge this is to support the necessary public services and infrastructure that allow successful businesses and individuals to prosper by allowing the broader population to share in that prosperity.

Acknowledging Fortuna means acknowledging that luck is partly responsible for my station in life. It means I'm obliged to help my fellow citizens who've been hurt by nothing other than misfortune. And, it means that I'll be entitled to help if misfortune lays me so low that I cannot get back up without some assistance. The latter situation is hard for many to envision until they actually arrive there. That's why it pays to think about such possibilities ahead of time and act accordingly in one's role as a citizen.